Flannary v. Flannary, 121 S.W.3d 647 (Tenn. 2003)

Property Lost Prior to Divorce No Longer Exists and Can’t Be Considered Marital Property

In the run-up to Y2K, Mr. Flannary decided that the couple’s money wasn’t safe in the bank.  Therefore, starting in September 1999, he started making withdrawals, either $8000 or $10,000 at a time, in hundred-dollar bills.  He placed the money, totaling $48,000, in his bedroom drawer, with a plan to put the money back in the bank in January 2000.  But when the new year passed without chaos, he went to get the money, only to discover that it was gone.  He later admitted that the idea was “stupid,” and that he never thought of putting the money in a safe deposit box.  He accused his wife of taking the money.  Not only did she deny it, but she contended that she didn’t even know about it until the accusations.

Soon thereafter, they were in divorce court, and the disposition of the $48,000 was one of the key issues.  The trial court agreed that putting the money in the drawer was a bad idea, noting that even putting it in a fruit jar and burying it in the back yard would have been safer.  The trial court held that the $48,000 was marital property, and had to be “divided like any other marital property.”  Accordingly, the wife was granted a judgment against the husband in the amount of $24,000.

The Court of Appeals, with one judge dissenting, reversed.  It held that since the money had disappeared prior to the divorce, it was error to divide property that wasn’t there.

The Supreme Court treated the issue somewhat differently.  It noted that both parties testified that the money was not in their possession, and the trial court had even conceded that neither party knew what happened to it.  Therefore, the money wasn’t owned by either party at the time the complaint was filed.  Since neither party owned the money, it did not fit within the definition of marital property.  For that reason, the trial court had erred in including it in the marital property.

It should be noted that the court didn’t go quite so far as to declare it separate property.  However, it cited Brock v. Brock, 941 S.W.2d 896 (Tenn. Ct. App. 1996) for the proposition that the property was not marital property.

Even though the high court reversed the trial court’s theory of the case, the husband was not out of the woods.  The court noted that in making the distribution, the court is to consider all relevant factors, including the actions of the parties throughout the marriage.  It pointed out that it was the husband’s careless actions that resulted in the disappearance of the money, and that this was a relevant factor.  It remanded the case to the trial court to consider the relevance of the husband’s conduct with respect to the missing money.

This post is part of a series, Appreciation of Separate Property: The Forensic Accountant’s Full Employment Act.

The post Property Lost Prior to Divorce No Longer Exists and Can’t Be Marital Property first appeared on Miles Mason Family Law Group, PLC.